Nieebgate: A revolution betrayed

HARARE - The Zimplats Indigenisation Transaction (“ZIP”), a landmark transaction in terms of value and significance now exposes the confusion that is inherent in a programme not supported by a coherent knowledge, capital and execution strategy.

 The objective to empower previously disadvantaged persons is laudable but the legal, just and equitable and constitutional instruments to achieve the desired goal will always be more difficult to develop.

After reading the comments by President Robert Mugabe in an interview aired on the Zimbabwe Television(Ztv) and published by the Herald newspaper on Saturday, March 2, 2013, one gets the distinct impression that Mugabe’s indigenisation template is diametrically opposed to the one used so far by Saviour Kasukuwere and defended vigorously by Jonathan Moyo.

Against a background of a scandal that is unfolding in relation to the legal, financial and ideological basis on which the indigenisation deals have been designed, structured, and implemented so far particularly in respect of mineral resources, Mugabe clearly oblivious of the true nature of these deals, said that the government would not stop implementing the indigenisation and empowerment programme.

There is no doubt that both Zimplats’ shareholders and Kasukuwere and his team have reason to be worried by Mugabe’s comments.

It is important, therefore, to unpack the comments and implications on the way forward.

Mugabe holds the view that Zimbabwe should not allow its resources to go into foreigners’ hands.  

What is the meaning of this statement?  

It would appear that president Mugabe was intimately involved in the negotiations leading to the conclusion of these transactions given his active and enthusiastic participation at the launches of a number of community share ownership schemes and must, therefore, have known about the basis on which the deal was to be done.

Any other construction would seem to suggest that in packaging the transaction in the manner contained in the signed Term Sheet, Kasukuwere overstepped his powers.

If this were the case, one would have expected Mugabe to fire him or for him to resign.  

Notwithstanding, Mugabe believes that the deals concluded should be unwound to reflect the principle that the ownership of mineral resources must always vest in the people whatever this means in practical terms.

Mugabe said this in relation to the theme that resources should never be allowed to go into foreign hands: “That is really to commit an act of defiance against God’s order and not only that, we will be acting in a foolish way ourselves.

“This is our land, these are our resources.What sort of people will we be to show that reckless disregard?”

He went further to connect the indigenisation programme to the war of liberation.

 Obviously oblivious of the construction of the mining deals concluded so far, he said that government would not buy shares in mining companies, but would use the value of the mineral deposits to determine shareholding.

Moyo got it right that the same resources that Mugabe is talking about were indeed valued in terms of the Zimplats transaction on the basis that they were owned by Zimplats and, therefore, the only legal mechanism for shares to change hands to indigenous persons or structures would have to be on a willing-buyer willing-seller basis unlike the land issue that was addressed by way of a constitutional amendment.

Mugabe would be aware that there is no legal basis to deprive Zimplats of the right to exploit the reserves that it spent money to discover based on a licence duly granted by his government.

History will confirm that the prospecting rights in relation to platinum resources were granted by the post-colonial administration.  

In fact, Mugabe should know better for the Special Mining Lease granted to Zimplats was under his watch.
Ian Smith and his predecessors had no idea that Zimbabwe was rich in these resources to permit any rational assertion that colonialism had any part to play in the allocation of the rights.

If the premise that Mugabe would now want indigenisation programmes to be pursued, he should direct his criticism to not only the relevant role players that allowed foreign companies to be granted prospecting and mining rights and very well find himself on the wrong side of the debate as he was the sole principal at the material time who failed to protect what he now holds as an order from God.

There has been no allegation that prospecting and mining orders were fraudulently granted to the very companies that are now being accused of stealing God’s promise to indigenous Zimbabweans.

The appropriate and just time for the sovereignty argument over minerals to have been made was before licences were granted.

Surely, when licences were granted to mining investors, little or no knowledge was known regarding the mineral potential.  

Zimbabwe’s promise can only be delivered if risk takers are allowed to harvest the outcomes of their efforts.  

Moyo sought to address the concern that the platinum resources were undervalued in arriving at the transaction value.   

Zimplats, the company, was valued at $2 764 billion in terms of the transaction.

However, Moyo makes the point that J.P. Morgan and Citi valued the same company at $4 billion and $3,23 billion, respectively.  

To get this valuation, regard was taken into account of the platinum resources that form part of the company’s asset base.

Using Mugabe’s reasoning, in valuing the company like Zimplats, the reserves must not be taken into account as part of the asset base of the company, rather the value of the reserves should be exclusively assigned to indigenous persons who evidently played no part in identifying and establishing the resource.

Moyo sought to argue that Zimbabwe got the best deal as negotiated by the government supported by Brainworks.

He makes the point that a company that was conservatively valued at $2,7 billion (this value itself already discounted from a possible high of $4 billion) was further discounted to a value of $1,6 billion for the purpose of the transaction.

It must be noted that the value in question is the value to shareholders and not the value of the resources.  

The Reserve Bank of Zimbabwe (“RBZ”) put the nominal value of the resources at a minimum of $90 billion to a maximum of $180 million to make the argument that Zimbabwe was robbed.
It would appear that Mugabe has implicitly accepted the RBZ argument that would then mean that this unrealistic valuation should form the basis of the rearrangement of the shareholding of Zimplats.

One can then appreciate the implications of this argument now forcefully advanced by Mugabe.  

Clearly, one would have expected Moyo, Gideon Gono, Kasukuwere and Mugabe to know about the way to go before embarking on a journey without a roadmap.

Moyo presumably guided by the legal and constitutional realities argues that the country including Mugabe must be applauded for: “pegging an asset allegedly worth $180 billion at a paltry $1,6 billion thereby enabling the indigenous entities to purchase the asset for some $818 million representing 51 percent of the agreed value”.

He goes further to state that: “51 percent of $180 billion would be staggering and unthinkable” and yet Mugabe believes otherwise.  

If indeed, the resources that were endowed by the Creator to Zimbabwe are worth $180 billion then why discount this value and for whose benefit.  

It would appear that foreigners would be the beneficiaries of this largesse.

Given that Mugabe holds the same view expressed by Gono, it would be self-evident that the harsh words used against Gono were really meant for Mugabe.

Moyo had this to say: “But of course by sucking their thumbs up with the figure of $180 billion as the value of the resource in-situ, the RBZ is pursuing a propaganda smokescreen to argue that the indigenous entities should not pay anything to Zimplats because they own the resource which is worth $180 billion blah blah.  

“This is constructive confusion designed to muddy the views of the uninitiated among us.”

It would appear that Mugabe according to Moyo belongs to the class of the uninitiated.

Mugabe said that Kasukuwere and indeed Moyo got it wrong when he signed a deal agreeing that Zimbabwe will pay for acquiring shares in Zimplats.  

He said: “So you see problem ndiyoyo, ivo vakatipa 51 percent vachiti chikwereti chatirikukupai asi tirikukubhadharirai mangwana mozotibhadhara that is where the difference is. I think that is where our minister made a mistake. He did not quite understand what was happening and yet theory yedu ndeyekuti resource iyoyo ndeyedu and that resource is our share that is where the 51 percent comes from.”

President Mugabe is the captain of the ship that is about to go to the polls with this kind of confusion on a matter that is critically important to Zanu PF.

This confusion does not help the cause of State actors who were yesterday congratulating themselves on mission accomplished only to discover that they got it wrong.  

Surely, Kasukuwere should have known the views of his boss rather than listening to Moyo let alone relying on brains at work in Brainworks that are not in the Zanu PF structures.   

It would appear that Gono has won this argument and the confusion will surely follow as sunset follows sunrise. - Mutumwa Mawere

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